Shri Daljitsingh D.Randhawa, Baroda V. The Income tax Officer,Ward-2(3), Baroda

ITA 1415/AHD/2011

• Counselvise Citation: 141520514 RSA 2011
• Duration Of Justice: 4 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA SR DR
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.1414/AHD/2011 AY 2006-07 2. ./ I.T.A. NO.1415/AHD/2011 AY 2006-07 1.SHRI AMARJITSINGH D. RANDHAWA B-24, AMBICA NAGAR SOCIETY-3 NR.DURGA TRADERS CHHANI JAKAT NAKA, BARODA 2.SHRI DALJITSINGH D. RANDHAWA B-24, AMBICA NAGAR SOCIETY-3 NR.DURGA TRADERS CHHANI JAKAT NAKA, BARODA / VS. 1.THE INCOME TAX- OFFICER, WARD-2(4) BARODA 2. THE INCOME TAX- OFFICER, WARD-2(4) BARODA ./ ./ PAN/GIR NO. : 1. AEGPR 7933 D 2. AEGPR 7944 L ( ' / APPELLANTS ) .. ( #' / RESPONDENT ) ASSESSEE(S) BY : MS.URVASHI SHODHAN, AR REVENUE BY : SHRI D.C. MISHRA, SR.DR $%& ' ( / DATE OF HEARING 23/09/2015 )*+ ' ( / DATE OF PRONOUNCEMENT 21/10/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE APPEALS BY DIFFERENT TWO ASSESSEES ARE DIR ECTED AGAINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TA X(APPEALS)-II, BARODA [CIT(A) IN SHORT] BOTH IDENTICALLY DATED 26/07/2 010 PERTAINING ITA NOS.1414 & 1415/AHD/2011 SH. AMARJITSINGH D.RANDHAWA VS. ITO & SH. DALJITSINGH D.RANDHAWA VS. ITO RESPECTIVELY ASST.YEAR 2006- 07 - 2 - TO ASSESSMENT YEAR (AY) 2006-07. SINCE COMMON ISSUE S ARE INVOLVED IN BOTH THESE APPEALS, THESE WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. WE TAKE UP ITA NO.1414/AHD/2011 AS THE LEAD CASE, AS THE FACTS OF BOTH CASES ARE IDENTICAL. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA N O.1414/AHD/2011 FOR AY 2006-07 (IN THE CASE OF SHRI AMARJITSINGH D RANDHAWA). THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CO NFIRMING ADDITION MADE BY AO OF RS.3,66,469/- BY INVOKING PR OVISIONS OF SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDU CTION OF TDS FROM TRANSPORTATION COMMISSION. BY CONFIRMING THIS ADDITION THE LD.CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT PA YMENT RELEASED FOR ARRANGING THE BUSINESS OF TRANSPORTATION WAS NET OF AGREED COMMISSION BY THE ARRANGER, THAT WOULD NOT ENTAIL D EDUCTION OF TAX AND HENCE THIS ACTION OF LD.CIT(A) BEING WITHOUT AN Y MERITS OR - JUSTIFICATION DESERVES TO BE QUASHED. LD. CIT(A) OUGHT TO HAVE DELETED THE DISALLOWANCE MADE BY AO. 2. LEARNED CIT(A) HAS FURTHER ERRED IN CONFIRMING SAID ADDITION BY HOLDING THE ASSESSEE DEFAULTER U/S.194H OF THE ACT WHEREAS LD.AO NOWHERE REFERS TO THIS SECTION FOR DISALLOWANCE OF THE COMMISSION EXPENSES. THIS ACTION OF LD.CIT(A) IN CONFIRMING D ISALLOWANCE MADE BY AO MAKING APPLICABLE PROVISIONS OF SECTION 194H WITHOUT CONFRONTING THE ASSESSEE IS HARSH, UNCALLED FOR AN AGAINST PRINCIPLES OF NATURAL JUSTICE. 3. LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF REPAIRS AND MAINTENANCE EXPENSES OF RS.4,58,971/- MADE BY AO AP PLYING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. LD.CIT (A) GROSSLY ERRED ITA NOS.1414 & 1415/AHD/2011 SH. AMARJITSINGH D.RANDHAWA VS. ITO & SH. DALJITSINGH D.RANDHAWA VS. ITO RESPECTIVELY ASST.YEAR 2006- 07 - 3 - IN REJECTING THE SUBMISSIONS OF THE APPELLANT IN SU PPORT OF THE CLAIM THAT NO TDS WAS DEDUCTIBLE ON THE SAID PAYMENT. LD .CIT(A) OUGHT TO HAVE ADMITTED THE DOCUMENTS SUBMITTED AND CALLED FOR REMAND REPORT FROM AO INSTEAD OF DENYING THE OPPORTUNITY T O THE APPELLANT TO SUBSTANTIATE THE CLAIM. THE ORDER OF LD.CIT(A) BEING AGAINST PRINCIPLES OF NATURAL JUSTICE DESERVES TO BE QUASHE D AND OPPORTUNITY BE GRANTED TO THE APPELLANT. 4. LEVY OF INTEREST U/S.234A, 234B & 234C OF THE ACT I S NOT JUSTIFIED. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS FRAMED VIDE ORDER DATED 26/09/2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE TWO DISALLOWANCES, ON ACCOUNT OF TRANSPORTATIO N COMMISSION EXPENSES OF RS.3,66,469/- AND REPAIRS & MAINTENANCE EXPENSES OF RS.4,58,971/-. AGAINST THE SAID ASSESSMENT ORDER, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, REJECTED THE APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 2.1. THE APPEAL(S) IS/ARE BARRED BY 192 DAYS. A P ETITION FOR SEEKING OF DELAY HAS BEEN FILED BY THE ASSESSEE(S). THE ASSES SEE HAS ALSO PLACED AN AFFIDAVIT DATED 04/08/2015 ON BEHALF SHRI DEEPAK P. ADHVARYU STATING THEREIN THAT HE WAS ASSIGNED TO FILE THE APPEAL ON BEHALF OF THE ASSESSEE ITA NOS.1414 & 1415/AHD/2011 SH. AMARJITSINGH D.RANDHAWA VS. ITO & SH. DALJITSINGH D.RANDHAWA VS. ITO RESPECTIVELY ASST.YEAR 2006- 07 - 4 - AGAINST THE IMPUGNED ORDER. HOWEVER, THE ORDER DAT ED 26/07/2010 WAS RECEIVED ON 08/09/2010. THE ORDER WAS TO BE HANDE D-OVER TO THE CONCERNED CHARTERED ACCOUNTANT FOR FILING THE APPEA L. HOWEVER, THE ORDER COULD NOT BE HANDED-OVER DUE TO PRESSURE OF F INALIZATION OF ACCOUNTS, FILING OF RETURNS, ETC. THE DELAY WAS D UE TO MISTAKE OF AUTHORIZED REPRESENTATIVE SHRI DEEPAK P.ADHVARYU. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO TAKE ANTI-ADVANTAGE OF THE DELAY. THEREFORE, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DELA Y BE CONDONED IN THE INTEREST OF JUSTICE. 2.2. ON THE CONTRARY, LD.SR.DR OPPOSED THE SUBMISSI ON OF THE LD.COUNSEL FOR THE ASSESSEE. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE AFFIDAVIT FILED ON BEHALF OF THE ASS ESSEE. LOOKING TO THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THE REASONING GIVEN BY THE LD.COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THERE WAS A REASONABLE CAUSE FOR FILING THE PRESENT APPEAL(S). HENCE, THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING. 3. GROUND NOS.1,2 & 3 ARE AGAINST CONFIRMING ADDI TION MADE BY THE AO OF RS.3,66,469/- AND CONFIRMING THE DISALLOWANCE OF REPAIRS AND ITA NOS.1414 & 1415/AHD/2011 SH. AMARJITSINGH D.RANDHAWA VS. ITO & SH. DALJITSINGH D.RANDHAWA VS. ITO RESPECTIVELY ASST.YEAR 2006- 07 - 5 - MAINTENANCE EXPENSES OF RS.4,58,971/- MADE BY THE A O APPLYING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 3.1. AT THE OUTSET, THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT BOTH THE APPEALS ARE REQUIRED TO BE RESTORED TO THE FILE OF AO FOR VERIFICATION AND DECISION AFRESH. THE LD.COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE AO HAS INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED THE TAX O N THE COMMISSION OF RS.3,66,469/- AND OTHER EXPENDITURE ON REPAIRS & MA INTENANCE OF RS.4,58,971/-. ON THE FIRST ISSUE, REGARDING THE C OMMISSION, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSU E IS REQUIRED TO BE RESTORED TO THE FILE OF AO FOR VERIFICATION. ON TH E CONTRARY, LD.SR.DR OPPOSED THE SUBMISSION OF THE LD.COUNSEL FOR THE AS SESSEE AND RELIED ON THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE AO MADE DISALLOWANCE ON THE BASIS THAT THE ASSESSEE WA S REQUIRED TO DEDUCT THE TAX ON THE COMMISSION RECEIPTS. IT IS THE CON TENTION OF THE ASSESSEE THAT THESE RECEIPTS ARE NOT OF THE CONTRACTUAL IN N ATURE. HOWEVER, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RECE IPTS HAVE BEEN OFFERED TO TAX BY THE CONCERNED PARTY. IN RESPECT OF OTHER ISSUES, I.E. NON- ITA NOS.1414 & 1415/AHD/2011 SH. AMARJITSINGH D.RANDHAWA VS. ITO & SH. DALJITSINGH D.RANDHAWA VS. ITO RESPECTIVELY ASST.YEAR 2006- 07 - 6 - DEDUCTION OF TAX, THE AUTHORITIES HAVE FAILED TO AP PRECIATE THE FACT THAT THE PAYMENTS WERE NOT EXCEEDED RS.50,000/- AND WHEREVER SUCH PAYMENTS WHICH EXCEEDED RS.20,000/- HAS BEEN ACCEPTED FOR DI SALLOWANCE. 4.1. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD.CIT(A) IN RESPECT OF DISALLOWANCE OF RS.3,66,469/-, HAS HELD THAT THE TAX WAS REQUIRE D TO BE DEDUCTED. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS TH AT THERE WAS NO CONTRACTUAL TERMS FOR THE PAYMENT OF COMMISSION. A LTERNATIVELY, IT IS SUBMITTED THAT THE CONCERNED PARTY HAS OFFERED THE RECEIPTS AS INCOME FOR THE YEAR UNDER APPEAL AND IN RESPECT OF THE SECOND DISALLOWANCE OF RS.4,58,971/-, IT IS CONTENDED THAT THE PAYMENTS DI D NOT EXCEED THE PRESCRIBED LIMIT, THEREFORE THERE WAS NO REQUIREMEN T TO DEDUCT THE TAX. WE FIND THAT THE AO HAS MADE DISALLOWANCE ON THE BA SIS THAT THE EXPENDITURE, LIKE SPARE-PARTS EXPENSES OF RS.1,17,2 37/- AND TYRE & TUBE EXPENSES OF RS.5,23,119/- ARE SEPARATELY DEBITED IN THE PROFIT & LOSS ACCOUNT. THEREFORE, IT CAN BE ASSUMED THAT THE REP AIRS AND MAINTENANCE EXPENSES OF RS.4,58,971/- DEBITED TO THE PROFIT & L OSS ACCOUNT WAS PURELY IN THE NATURE OF LABOUR CHARGES FOR REPAIRS AND MAI NTENANCE AND DID NOT INCLUDE ANY EXPENDITURE ON ACCOUNT OF PURCHASE OF A NY COMPONENTS/PARTS. WE FIND THAT THE AO HAS NOT MADE ANY ENQUIRY WITH R EGARD TO THE NATURE OF EXPENDITURE. HOWEVER, BEFORE THE LD.CIT(A), THE ASSESSEE HAS GIVEN SEPARATE ACCOUNT OF REPLACEMENT OF SPARES AND LABOU R CHARGES. UNDER ITA NOS.1414 & 1415/AHD/2011 SH. AMARJITSINGH D.RANDHAWA VS. ITO & SH. DALJITSINGH D.RANDHAWA VS. ITO RESPECTIVELY ASST.YEAR 2006- 07 - 7 - THESE FACTS, WE DEEM IT PROPER TO RESTORE THESE ISS UES TO THE FILE OF AO FOR DECISION AFRESH. NEEDLESS TO SAY THAT THE AO WOULD AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AS A RESULT, ASSESSEES APPEAL (IN THE CASE OF SHRI AMARJITSINGH D.RANDHAWA ) IS ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND NO.4 IS AGAINST LEVY OF INTEREST U/S.234A , 234B & 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE, HELD ACCO RDINGLY. 6. NOW, WE TAKE UP THE ASSESSEES APPEAL IN THE CAS E OF SHRI DALJITSINGH D.RANDHAWA FOR AY 2006-07. 6.1. SINCE THE GROUNDS AND FACTS OF THE CASE ARE I DENTICAL TO THAT OF SHRI AMARJITSINGH D.RANDHAWA (SUPRA) WHICH HAS BEEN DECI DED BY US, THEREFORE WE RESTORE THESE COMMON ISSUES WITH SIMIL AR DIRECTIONS AS GIVEN IN THE CASE OF SHRI AMARJITSINGH D.RANDHAWA(SUPRA) TO THE FILE OF AO TO DECIDE THE SAME AFTER PROVIDING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. THUS, GROUND NOS.1, 2 & 3 RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. GROUN D NO.4 IS AGAINST LEVY OF INTEREST U/S.234A, 234B & 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE, HELD ACCORDINGLY. ITA NOS.1414 & 1415/AHD/2011 SH. AMARJITSINGH D.RANDHAWA VS. ITO & SH. DALJITSINGH D.RANDHAWA VS. ITO RESPECTIVELY ASST.YEAR 2006- 07 - 8 - 7. IN THE COMBINED RESULT, THE APPEAL(S) IN THE CAS E(S) OF SHRI AMARJITSINGH D.RANDHAWA AND SHRI DALJITSINGH D.RAND HAWA FOR AY 2006-07 BOTH ARE ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 21 ST DAY OF OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 21/ 10 /2015 /(..$ , %.$../ T.C. NAIR, SR. PS !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012 3 / CONCERNED CIT 4. 3 ( ) / THE CIT(A)-II, BARODA 5. 4%5 $12 , ( 12 + , 0 / DR, ITAT, AHMEDABAD 6. 578 9& / GUARD FILE. / BY ORDER, #4 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD